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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 10, 2012 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of a- of Lancer Insurance Company (Lancer) (Chicago, IL). Concurrently, A.M. Best has upgraded the FSR to B++ (Good) from B+ (Good) and the ICR to bbb from bbb- of North Sea Insurance Company (North Sea) (Long Beach, NY). The outlook for North Seas ratings is stable.
The revised outlook for Lancer reflects consistently strong operating results that A.M. Best expects will continue into the future. Furthermore, results have generally outperformed the companys commercial automobile peer composite while showing relatively little volatility over the long term.
The ratings reflect Lancers solid market presence in the specialty transportation market, strong risk-adjusted capitalization and favorable return measures over both a five- and ten-year period. Partially offsetting these positive rating factors are the company's heightened expense ratios and history of large stockholder dividends. The ratings could be negatively impacted by a significant decline in risk-adjusted capitalization or operating results.
The upgrading of North Seas ratings reflects the capital and operating support received from its parent company, Lancer Financial Group, Inc. (LFG). LFG (which is also the parent company of Lancer Insurance) purchased North Sea in early 2009. Since this acquisition, LFGs management has been intimately involved in the day-to-day operations of North Sea. Further, LFG infused $3.2 million of additional capital into North Sea in 2011.
North Seas ratings reflect its solid risk-adjusted capitalization, focused niche market strategy, solid liquidity and the support received from its parent company. The positive rating factors are offset by the company's modest business scope, rising loss and expense ratios and historically volatile operating results. The ratings could be negatively impacted by persistent unfavorable operating results or a drop in risk-adjusted capitalization.
Lancer is one of the largest specialty passenger transportation insurers of motor coaches, school buses, transit buses, limousines and vanpools in the United States. North Sea specializes in providing commercial multiple-peril, general liability, fire and allied lines insurance to small to medium-sized businesses primarily in New York City and Long Island.
The methodology used in determining these ratings is Bests Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bests rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: Risk Management and the Rating Process for Insurance Companies; Insurance Holding Company and Debt Ratings; Rating Members of Insurance Groups; and Understanding BCAR for Property/Casualty Insurers. Bests Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the worlds oldest and most authoritative insurance rating and information source.